Monday, August 23, 2010

Gas prices: If oil at $140/barrel yields $4 gas, then why doesn't $35/barrel oil yield $1 gas?

Can anyone please explain this?Gas prices: If oil at $140/barrel yields $4 gas, then why doesn't $35/barrel oil yield $1 gas?
Its called price gouging my friend!Gas prices: If oil at $140/barrel yields $4 gas, then why doesn't $35/barrel oil yield $1 gas?
I'm sure it has something to do with Petroleum Company tax breaks and subsidies that they receive in the US. The US is by far the largest importer of foreign oil in the world, and compared to other large importers, like most of Europe, our gasoline is actually quite a bargain. Prices in Europe can easily be triple what they are over here. Also, the price of Crude oil is only a ';piece of the pie'; when it comes to the cost of Gas. There is also distribution, marketing, taxes, and the actual refining of the oil into gas. Some of the other pieces are fixed, while others fluctuate with the price of crude oil.
The oil price is $40 and the costs refinery repair and maintenance does not fall in proportion to gasoline. In fact, the Dec.-Mar period is the period for repair and maintenance of the refineries. This is not a conspiracy; but, the way the refiners conduct schedule their work. The reasoning is that driving is down during the off season. A lot of oil is not going to be sold at $40 a barrel. The holder of the oil will just sit on it vs. taking a significant loss on the product. If there is a 1 barrel of oil to 1 gallon of gasoline set ratio, then maybe someone can give an answer that conforms to your theory.
Because the cost of gasoline equals the cost of the crude plus the transport cost to get the crude to the refinery, plus the cost of refining the crude oil into gasoline, plus the cost of getting the gasoline to a station near you, plus the cost of running the gas station. Those other costs have not changed only one part of the equation has gone down the rest have remained constant. The biggest is the amount of tax you pay on a gallon of gas no matter what it costs.
Crude availability is only part of the pricing. A significant ratio of the price comes from refinement as well, which won't go down until more refineries are built.
Because Obama has stock in the oil companies..
No fair using math!
That whole system is a bunch of b.s. I know one thing for sure, IT IS NOT SUPPLY AND DEMAND.

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